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What is the nominal rate of interest compounded monthly if the effective rate of interest on an investment is 4.5%? The nominal rate of interest is% compounded monthly. (Round the final answer to four

User Iopq
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To solve for the nominal rate of interest compounded monthly given the effective rate of interest, we can use the following formula:

Effective rate = (1 + (nominal rate/m))^m - 1

where m is the number of compounding periods per year.

In this case, the effective rate of interest is 4.5% and the compounding period is monthly, so m = 12.

Substituting these values into the formula, we get:

4.5% = (1 + (nominal rate/12))^12 - 1

Simplifying this equation and solving for the nominal rate, we get:

nominal rate = 12 * [(1 + 4.5%)^(1/12) - 1]

nominal rate ≈ 4.3574%

Therefore, the nominal rate of interest compounded monthly is approximately 4.3574%.

User Jtcruthers
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